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LONDON MARKET PRE-OPEN: Galliford Try Cuts Payout As Profit Falls

Wed, 11th Sep 2019 07:38

(Alliance News) - Stocks in London are set to open higher on Wednesday as investors anticipate monetary policy easing measures from the European Central Bank on Thursday.

In early UK company news, Galliford Try reduced its dividend by a quarter as it reported a fall in annual profit a day after announcing revived housebuilding merger talks with Bovis Homes, while fellow homebuilder Crest Nicholson said it has appointed the former chief executive of Tate & Lyle as its new chair.

IG says futures indicate the FTSE 100 index of large-caps to open 22.55 points higher at 7,290.50 on Wednesday. The FTSE 100 index closed up 32.14 points, or 0.4%, at 7,267.95 on Tuesday.

"There is no shortage of theories why equity markets are so resilient in the face of so much adversity. However, it may not be any more complicated than the fact global investors appear more than happy to run with the 'risk-on' squeeze on the back of the latest positive short-term developments around the prospect of a high-level Chinese trade delegation going to Washington in October; and anticipation of more central bank easing," said Stephen Innes, Asia Pacific market strategist at AxiTrader.

The European Central Bank on Thursday is expected to unveil a package of stimulus measures in an attempt to help bolster the slowing eurozone economy.

Ahead of this, the economic calendar on Wednesday has US producer prices at 1300 BST.

In the US on Tuesday, Wall Street ended mixed, with the Dow Jones Industrial Average ending up 0.3%, the S&P 500 flat and Nasdaq Composite closing slightly lower.

Shares in iPhone maker Apple closed up 1.2% after the firm unveiled its iPhone 11 models with a price cut for the most basic models, while also laying out plans for streaming and gaming services as it bids to weather the slump in the global smartphone market.

Apple unveiled three versions of the iPhone 11 including "Pro" models with triple camera and other advanced features starting at USD999 and USD1,099, unchanged from last year's prices, touting upgraded features including ultra-wide camera lenses.

The surprise from Apple was the reduction in the starting price at USD699, down from USD749 for the iPhone XR a year ago even as many premium devices are being priced around USD1,000.

In early UK company news, construction firm Galliford Try reported a fall in annual profit and sliced its dividend by a quarter.

Revenue for the year to June 30 fell 7.5% to GBP2.71 billion from GBP2.93 billion, with pretax profit dipping 27% to GBP104.7 million from GBP143.7 million. The company cut its full-year dividend 25% to 58.0p from 77.0p.

Galliford said its construction result for the year was hit by challenges in both legacy projects and some current one, though the business continues to see "good demand" in its Building and Infrastructure divisions, which are part of Galiford's Construction arm.

On Tuesday, Bovis Homes Group said it had resumed talks to acquire peer Galliford Try's housebuilding businesses. Back in May, Galliford rejected a GBP1.05 billion bid by Bovis for Galliford's Linden Homes and Partnerships & Regeneration businesses.

On Wednesday, Galliford Chief Executive Graham Prothero said: "The potential combination of our Linden Homes and Partnerships businesses with Bovis Homes represents a superb opportunity, enhancing the prospects for all three of our businesses to thrive as strategically focused and well-financed operations with excellent opportunities for growth. The transaction allows Construction to continue trading as a standalone well capitalised business."

Galliford reported 6,507 home completions in the year, comprising 3,229 in Liden Homes and 3,278 from Partnerships & Regeneration.

Liden Homes revenue fell 13% to GBP820.4 million, while profit from operations was also down 13% to GBP160.5 million. Partnerships & Regeneration, meanwhile, recorded a 31% rise in revenue to GBP623.2 million, while profit from operations rose 47% to GBP34.8 million.

In other housebuilding news, Crest Nicholson said it has appointed Iain Ferguson as non-executive chair.

Ferguson was previously chair of Stobart Group and chief executive at Tate & Lyle. Crest Nicholson's current chair, Stephen Stone, will step down from the board at the end of October.

Car dealer Inchcape said it has agreed to sell three retail sites to Australia to Sime Darby Motors for GBP63 million.

This is in line with Inchcape's focus on core distribution capabilities, and will streamline the Australasia business. The hit to 2019 trading profit from the disposals is expected to be "immaterial", it said.

"Today's announcement demonstrates the disciplined utilisation of capital towards this high returning and capital light part of the market where I continue to see both organic and inorganic opportunities for Inchcape," said Chief Executive Stefan Bomhard.

S4 Capital reported a sharp rise in interim revenue, but sank to a loss.

Revenue for the six months to the end of June rose 42% to GBP88.0 million from GBP62.1 million, though the Martin Sorrell-led ad firm swung to a pretax loss of GBP8.5 million from a GBP12.1 million profit a year ago.

This was mainly due to GBP15.0 million in "adjusting items", which included non-recurring items and the amortisation of certain fair value adjustments.

"These results confirm the power and relevance of the faster, better, cheaper, digital-only unitary advertising model, with first party data fuelling content and programmatic. Now the task is to build significant scale organically, by broadening and deepening existing and new client relationships and adding resources through merger and acquisition. Your company is being increasingly involved in significant industry reviews," said Sorrell, who is S4 Capital's executive chair, who used to be the chief executive officer of FTSE 100-listed advertising firm WPP.

S4 added that the second half is expected to be "even stronger" and has started "very well".

In the UK, Prime Minister Boris Johnson has sought to shore up support for his Brexit ambitions, as Labour's deputy leader prepared to call for a second referendum before any general election.

Johnson held talks with the Conservatives' key parliamentary allies the DUP, with leader Arlene Foster and her deputy Nigel Dodds spending more than an hour inside Downing Street.

Wednesday also will mark a deadline set by MPs for the government to publish communications connected to prorogation and no-deal Brexit planning.

Former attorney general Dominic Grieve's demand for all written and electronic contact about the temporary suspension of Parliament and Operation Yellowhammer documents since July 23 to be released was approved by 311 votes to 302 on Monday.

Grieve's motion asked for all correspondence and communications, formal or informal, including WhatsApp, Facebook Messenger, private email accounts and official and personal mobile phones connected to the present government since July 23 relating to prorogation.

The government described the scope of the information requested as "disproportionate and unprecedented", adding in a statement after the vote: "We will consider the implications of this vote and respond in due course."

In Asia on Wednesday, the Japanese Nikkei 225 index closed up 1.0%. In China, the Shanghai Composite is down 0.3%, while the Hang Seng index in Hong Kong is up 1.7%.

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